How Estated CEO Josh Fraser grew Estated to $6.5M revenue and 151 customers in 2024.

folks exciting interview today my guest�� is josh frazier he's building a company���� called estated.com it's a property intelligence�� tool josh you're ready to take us to the top���� let's go all right there's a lot of money out�� there right now and everyone's going to buy���� houses investors included who is using you guys�� is it investors or home buyers consumers directly���� actually our bigger segments are in fintech and�� insure tech so we're working with like blend and���� sofa and state farm and swiss re and usaa and�� companies along those lines on more like the pnc���� insurance side and getting lending and�� mortgages and just trying to speed up���� all those tools because like talking to a�� friend in florida yesterday it took them���� 16 hours to get a mortgage it's like we should�� be able to do this in 60 seconds and so we're���� helping with a lot of the data on the background�� um to build like profiles around those houses for���� mostly insurance and um yeah lending and so how�� many customers like that do you have we have a���� 151 customers as of today amazing okay got�� it so this makes sense and the main model is���� a license oh it's basically a licensing model�� is it sas fee or like per api call or something���� so we have two models we have a�� data license scene which is annual���� contracts um and we update it monthly so we�� still consider it a subscription and profit well���� and then as well we have yeah like a volume based�� subscription for the api interesting and so uh���� how many ap i guess maybe this is our question�� how many api calls hit the system last month josh was just telling me before the call guys that�� he has all this data open and then i asked him a���� question it was like that one question that that�� isn't probably like six to seven million okay now���� we're successful so probably like 20 million�� but there may have been inaccurate addresses���� sent through the system and so um that happens�� a lot if people don't clean their addresses���� especially with user inputted ones so like correct�� ones um are probably in the six to seven million���� range okay okay and so these 151 customers�� what are they paying on average per month���� so the lifetime value in our profitable�� account because i pulled this up for you���� is 54 268 a year average revenue per user is 929�� dollars per month that's on a monthly basis yeah���� so that kind of scales out across the 151 yeah�� for the episode so you're doing about 140 150���� 000 a month in revenue right now exactly we�� are 140 mrr with a 1.68 arr yep yep and how���� has that grown over time where were you last�� year do you remember we ended the year at 900k���� in arr um and so the last thing i see in profit�� well it's march yeah we started january at 77���� so to be at 140 we'll definitely cross over�� like 200 growth this year yeah that's that's���� incredible um where is most like growth coming�� from is it upgrading the same customers to more���� api calls or adding new logos all together�� adding new logos where are you finding them���� uh i come from digital marketing so i have�� pretty good google adwords presence i think���� we have a little bit of thought leadership in�� space as well just with content um but you know���� google adwords and and driving leads from there�� has been really successful for us how much did���� you spend last month on google ads would you�� guess uh 20 22 grand okay so not not well maybe���� a little bit was a 15 of your total revenue so 22�� grand and what will that get you how many leads���� yeah i have my scorecard thanks to sas academy�� here um in june we generated 415 leads okay so���� my admin was actually 29 000. okay um a little�� bit more that so i was that was google adwords���� was probably 22. across facebook linkedin we're�� kind of experimenting a little bit with bing as���� well so 29 total 415 leads average cost per�� lead 72 bucks conversion rate on um turning���� them into customers two percent two percent yeah�� we got eight customers okay got eight customers���� and that's at that 900 a month price point right�� correct okay got it so i mean that i mean that's���� a super healthy i mean can you spend more money�� there that feels like healthy ads been to me���� um yes but i only have one sales person we're�� recruiting we'll be hiring another one here���� right away and then uh we'll we'll keep ramping�� that up but we had uh two sales people turn over���� last month so a little bit of a change well you�� know this is always a trick this is one of the���� heart you know logging it's engineering i see more�� sas founders that getting like the sales motion���� with actual people involved like the reps hired�� onboarded and sticky is really difficult so 100���� it sounds like you're comfortable being vulnerable�� why do those two people quit that recently left���� and how are you thinking about the next one�� what learnings are you taking to the next one���� yeah this was a really good learning experience�� so um one quit because he was an entrepreneur on���� the side and his business got too busy and i kind�� of motivated him to continue working on that so���� almost my fault but i'm proud of them and then the�� second one was once so i had this very experienced���� sales rep liam was in the middle and then we had�� a junior sales rep and so when the middle rep���� quit the disparity between my senior sales rep�� and the junior sales rep was so vast that i���� fired this junior sales rep the next day i was�� like oh my god you're not gonna be able to cut���� it and so now i'm only gonna hire someone from a�� competitor that has five to ten years experience���� and the words i've been using in the interviews�� have been i need you to come in and hit the���� ground running i think as a sas founder with�� we have 12 employees i don't have a lot of time���� for training and so i want people to come in and�� know the language know how to sell already and so���� if i call it i need them to hit the ground running�� and so i'm really only looking at people directly���� from my competitors and we're using a recruiter�� to help us with that interesting what do you pay���� a recruiter to do this sort of thing um about�� 20 of the salary and on an sdr they don't even���� include the commission or ote it's on base which�� was really surprising to me and we found a company���� called lmre tech but they're specifically a prop�� tech recruiting firm and so it's been fantastic���� the resumes that they're sending us are just�� amazing i'm very very happy interesting um���� how do you spell that elomari it's just l�� like the letter it's like an acronym l m r e���� i think it's dot tech and they recruit for�� proptech firms and it's a global company too���� so that's been interesting us being in canada they�� find us candidates in canada the us um even over���� in the uk so it's been uh it's unique i've never�� seen something like this niche that's incredible���� this is like a perfect fit for you guys um�� interesting it's blown me away so far the���� people that they've sent to it a little bit more�� expensive than i would hope i think i'm just���� canadian in british columbia getting used to what�� someone gets paid in new york yeah it's always���� a little surprising to me yeah so what do you�� think like this new hire what do you think their���� base will be and what will their quota target be�� and what will their total on target earnings be���� yeah so we are i have no cap their quotas are�� 1.2 million a year and we pay 10 um so there���� if they achieve that 1.2 million on a 50 to 60�� thousand dollar base they could make it up to 180.���� got it 180 150 to 180 depending because we pay�� out on the schedule of how they sign up so if it's���� like month-to-month subscriptions versus annual�� subscriptions there's a bunch of variability in���� that but like 150 is like ote hopefully that�� makes a lot of sense how do you manage like���� a developer who might hear this interview and�� hear that your new sales reps going to make���� more than them and they're going but i'm the one�� building the technology why don't i get paid more���� hmm that's a great question we have our develop�� i've never been asked that first of all um and we���� do have a lot of transparency within our company�� people do know how much everyone else is making um���� i'm not even sure the developers all understand�� what the ote number is they probably just see the���� base you know like i'm not sure that that acronym�� makes a lot of sense and so but i do think that���� they understand that the sales people are the ones�� they hustle they hustle at a different pace and���� have a different like type of work environment�� whereas the engineers are all it's pretty cushy���� you know they get tasks they get them done�� i know they work hard but it's a little bit���� just of a different environment to work in their�� environment's a lot more comfortable our sales���� people are grinding how many engineers do you have�� uh seven right now are they all in house or did���� you leverage for the outsourced dev team uh there�� are full-time employees but we went work from home���� um covid and then we have decided to go fully�� remote so now we have one in russia one in um���� germany one in brazil and then four in�� british columbia how did you find them���� um another recruiting firm out of vancouver and�� both of them had experience working with the���� stated data which was crazy to me but that's�� a company called van hack and they're like an���� engineering recruitment firm that help�� people globally immigrate to canada and so���� um it's a really cool company i met ilya�� a few years ago 20 model there too yeah���� and they actually one of the cool things is�� that we just pay van hack for those employees���� and then they immigrate them within the first�� 12 months usually and then we'll hire them full���� time once they move to canada but so for the�� first year we're actually just paying van hack���� they're not full-time employees so we don't�� have to pay benefits or anything like that���� so it's actually been so far it's been working�� out yeah that's great how do you spell vanhack v-a-n-h-a-c-k like i don't know�� if it's like dot io or something���� or count i'm not sure which one it is put�� in the notes on on gitlab when we publish���� this bad boy so what does this put your total�� team at today 12 people you said exactly 12���� okay so engine you're very engineering heavy�� got it so yeah two finance people sales yeah���� two finance people got it um and and put this�� on a timeline for us when you launch the company���� stated started right after we entered tech�� stars in april of 2017. okay 20th and so we had���� no it was bootstrapped and then foundry came�� in because you kind of know we have an existing���� consumer business that's really you know cash flow�� positive and does well what is that called sorry���� us realty records that sits in the background it's�� a b2c subscription and so um we launched a stated���� and we ran it for about eight months and then�� foundry group and techstars came in gave us three���� million usd we were then started burning cash�� 2018 2019 um about three months ago i stated turn���� to profit again and um now we have both business�� units profitable and i don't think we'll probably���� go into the negative again anytime soon with�� no intention at least within the next i'd say���� three to four quarters of raising�� more capital and no intention of it���� such a different way to run your business yeah�� so that three million was raised back in 2017.���� uh we closed like december 15th to 2017.�� got the check i think january early january���� 18. interesting and what cap was that at or what�� evaluation uh 15 million usd how did you get to���� that like what did that feel fair at the time or�� um no it's an idea honestly but we did have this���� existing business in the background that was�� doing about three and a half million a year and���� i guess three million us at the time so i think�� we just got like a 5x on that but they were buying���� into both businesses but i was pitching that as�� stated was going to be the big one and we have a���� very clear path to get to 10 million are i think�� we could get to two and a half three this year���� if we keep this up so um that'll be like 300�� growth which um we'll be in a healthy position���� there's a lot of founders that go into this where�� they have like multiple projects running and like���� one starts to take off and you end up raising�� for it and many times these vc's like in the���� term sheets it'll say you have to commit all you�� know the founder especially you have to commit���� all your other ip and they'll want all these other�� things sort of included on the same cap table now���� it sounds like that's exactly what you did with�� this business that was doing 3.5 million a year���� do you regret that today would you try�� to keep them separate if you did it again yes for sure honestly like you know when if we�� were to go raise a series a there's a pretty���� good chance that i would take it off the table�� instead of taking like cashing out a little bit���� of my founders talk or something at that raise um�� i would probably just be like i'll just take that���� business out because one it's a little bit of a�� headache for us to do the reporting on to them���� um and ultimately they know it's not the end goal�� for us and so we've pitched a stated so hard so i���� absolutely would recommend um if you can still�� raise at the same value though because your vcs���� are smart and they're like oh you have this cash�� flow business in the back like of course we want���� a piece of that and so um yeah you're going to�� work with vcs because of their network and their���� intelligence so um it would have been a harder�� pitch but i absolutely would have tried it yeah���� yeah no interesting okay and so what does the cap�� table look like today how much do you still own���� what's 68 percent and then um i'd say about�� yeah 10 is to my employees and 20 we did this���� a standard 20 round uh to the investors yeah�� yeah very interesting okay cool so so uh about���� to be back to break even which is obviously a�� great place to be you're driving nice growth���� uh about 150 almost 200 percent maybe 200 year�� over year growth by the end of this year do you���� remember though we got 20 20 numbers do you�� remember what you're doing back in 2019 mris���� oh like nothing like 40 like we�� barely even had a product launch���� we we completely failed our�� product launch in 2019. it was���� it was less than 300 000 revenue the whole year�� what happened what happened why did it fail getting a nationwide data set of property�� data and collecting it on your own is just���� a massive challenge that we underestimated um the�� project scope i still think the project scope was���� okay for our first um attempt at it but you know�� we're competing with two up like black knight���� and corelogic first american multi-billion dollar�� companies that invest 50 plus million a year into���� this and so we thought we could do it with three�� and we blew through that money real quick and um���� we had like 60 coverage which just doesn't work in�� the data world um we it wasn't enough information���� and so we ended up fighting the bullet buying and�� then reselling which was like a really challenging���� decision for us wait say that again you did what�� we ended up pivoting at that point and instead of���� doing this whole collection model we purchased�� it from our competitors to some extent and then���� merged them all together and then started just�� doing better data quality and then that's why i���� think the stated is starting to take off because�� we have this mixed model of we know how to collect���� the data we just didn't have enough money to�� collect it all and it's an expensive project���� and so um if i were to do it again i just know�� that i probably would have like you know triple���� the cost and triple the time it takes yeah like�� sometimes people say double but like i'm like���� data's messy it's just disparate data siloed�� all over a certain geography can be really���� really messy so i triple pretty much everything�� in my head and our customers happy now are they���� sticking what's net dollar retention look like�� yeah so it's a little over 100 percent um like 101���� um which i was really my friends at banana tag got�� acquired for like 40 million not that long ago and���� that was like one of the most important metrics�� that he brought up to me that i think i didn't���� uh fully understand um until he mentioned that so�� mrr retention rate is 99.2 and customer retention���� rate is 98.6 um yeah that's monthly or annually�� so that's like just my july metrics okay got���� it yeah i mean it sounds like it sounds like you�� probably have something like you know five percent���� annual churn but six percent expansion so it's�� a 101 net something like that yeah that sounds���� about right we have pretty low churn rates like�� we're kind of hovering in that like one to two���� percent if we're less than one we're pretty happy�� and we break it out for like customer revenue but���� it's usually like we're trying to keep it at�� one percent or less uh our customers are really���� happy you know we just started like gathering�� g2 reviews we have i think 20 some now and���� they're almost all five stars even the one that�� we got that was three stars all says nice things���� and so um no one's really that someone's like it's�� like two stars it's like a great product beautiful���� but like this one pixel it's like that teacher�� that would never give out a hundred because they���� she didn't believe or he didn't believe in giving�� out a hundreds drives me crazy exactly what it is���� yeah it looks like they say the nicest things�� and they give us like a three or two star reviews���� but the algorithm the algorithm yeah exactly�� all i care about is the algorithm so yeah���� but you know what honestly one of my favorite�� parts about this business is that our customers���� are happy and there's lots of cool companies�� like we're doing some pilot stuff with like���� walmart and lowe's and like really interesting�� projects and i think that's what's exciting���� about it is like i know we're just scratching the�� surface on making some of these services better���� and you know when you're talking like walmart's�� and amazon to google's one percent improvement���� anywhere is huge it's worth millions and millions�� of dollars to them every year and so it's really���� fun working on these projects all right josh let's�� wrap up the famous five number one favorite book���� measure what matters john dewer number two�� is there a ceo you're following are studying���� a soft wand from hippo number three what's�� your favorite online tool for building a stated can i say google drive sure of course yeah number�� four how many hours of sleep you're getting���� seven okay and situation married single kids�� single okay no kids running around no kids���� running around all right josh how old are�� you 30 30 years old very cool last question���� something you wish you knew when you were 20. oh�� god something you i wished i knew when i was 20.���� um don't rush it it's gonna take time that�� overnight success is 10 years you'll read���� about that overnight success and when they say�� it took 10 years they're telling you the truth���� guys there you have it east stated easy access�� to 150 million properties worldwide insurance���� companies pay for this like so far they've got 151�� customers they're doing about 140 000 a month in���� revenue that's doubled from a year ago up from 70�� 000 uh per month again back in 2020 they're doing���� this all with just they raised about 3 million�� bucks on a 15 million dollar round back in 2017���� but josh and team cap table wise josh stone 68�� employees 10 and investors 20 but they're scaling���� nicely next step 10 million in ar we'll see what�� happens josh thanks for taking us to the top���� thanks a lot nathan one more thing before you�� go we have a brand new show every thursday at 1���� pm central it's called shark tank for sas we call�� it deal or bust one founder comes on three hungry���� buyers they try and do a deal live and the founder�� shares back end dashboards their expenses their���� revenue arpu cac ltv you name it they share it�� and the buyers try and make a deal live it is fun���� to watch every thursday 1 p.m central additionally�� remember these recorded founder interviews go live���� we release them here on youtube every day at 2 p.m�� central to make sure you don't miss any of that���� make sure you click the subscribe button below�� here on youtube the big red button and then click���� the little bell notification to make sure you get�� notifications when we do go live i wouldn't want���� you to miss breaking news in the sas world whether�� it's an acquisition a big fundraise a big sale a���� big profitability statement or something else�� i don't want you to miss it additionally if you���� want to take this conversation deeper and further�� we have by far the largest private slack community���� for b2b sas founders you want to get in there�� we've probably talked about your tool if you're���� running a company or your firm if you're investing�� you can go in there and quickly search and see���� what people are saying sign up for that at nathan�� lacka dot com forward slash slack in the meantime���� i'm hanging out with you here on youtube i'll be�� in the comments for the next 30 minutes feel free���� to let me know what you thought about this 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